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DG Deregulation and Interconnection

The market for power generation is undergoing a tremendous transformation to competition. At the same time, new cost-effective distributed generation technologies are becoming commercialized. Current trends, both in the U.S. and international markets, favor DG technologies for some key applications. Users can benefit by applying DG for baseload electric power, cogeneration, peak shaving, premium power or green power.

Two key factors to economically implementing DG projects are the state of electricity deregulation and utility interconnection. Deregulation can affect factors such as competing grid prices and rate structures, backup power costs, exit fees, net metering, meter unbundling, taxes and environmental considerations. Interconnection issues can affect factors such as the ability to sell power back to the grid, running in parallel with the grid and equipment cost.

In this study, deregulation impacts on DG are examined and summarized for leading states. An assessment is made on how these emerging regulations will favor or discourage DG. Factors such as electricity price freezes/reductions, new rate structures, stranded asset fees, competition transaction charges, exit fees, backup power costs, performance based ratemaking, environmental regulations, tax impacts, and selling power back to the grid are examined and summarized. States are ranked in terms of their "distributed generation attractiveness". In addition, estimates are made of how cost-to-generate will be impacted by different aspects of deregulation for various DG technologies, sizes, and applications.

Interconnection is currently one of the hottest topics in distributed generation. EPRI, IEEE, EEI, the U.S. government, and others are developing interconnection recommendations and standards. This study examines and summarizes these activities and quantifies their impact on the market for DG. Critical interconnection issues are identified, including:

For More Information, Please Contact

Paul Sheaffer, Director of Technology Analysis and Deployment

Resource Dynamics Corporation

8605 Westwood Center Drive

Vienna, Virginia 22182

Phone: 703.356.1300 | Fax: 703.356.2230 | Email: sheaffer@rdcnet.com